As filed with the Securities and Exchange Commission on November 25, 1998
Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TANGRAM ENTERPRISE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2214726
(State of Incorporation) (I.R.S. Employer Identification No.)
11000 Regency Parkway, Suite 401, Cary, NC 27511-8504
(Address of principal executive offices, including zip code)
1997 EQUITY COMPENSATION PLAN, STOCK OPTION PLAN FOR DIRECTORS, AND
CHARLES A. ROOT STOCK OPTION AGREEMENT
(Full title of the plan)
John B. Wright, II, Esq.
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087-1945
(Name and Address of Agent for Service)
(610) 293-0600
(Telephone Number of Agent for Service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
registered registered(1) share price fee(2)
Common Stock, 2,198,000 (2) $9,971,665 $2,772.12
$.01 par value
(1) Pursuant to Rule 416(a) under the Securities Act of 1933, this
Registration Statement also registers such additional shares as may
hereinafter be offered or issued to prevent dilution resulting from
stock splits, stock dividends, recapitalizations or certain other
capital adjustments.
(2) Calculated pursuant to Rule 457(c) and 457(h). As to 769,952 shares
subject to outstanding but unexercised options, the fee is computed
based upon the per share price at which the options may be exercised as
follows: 170,000 shares at $1.00, 2,000 shares at $1.125, 2,000 shares
at $1.50, 10,000 shares at $1.75 per share, 423,971 shares at $3.75,
29,499 shares at $4.50, 50,000 shares at $4.75, 2,000 shares at $5.00,
2,000 shares at $5.25, 2,000 shares at $5.75, 50,448 shares at $6.75,
4,000 shares at $7.00, 10,000 shares at $7.125, 2,034 shares at $7.375,
and 10,000 shares at $10.25. As to the remaining 1,428,048 shares that
are reserved for future issuance under the 1997 Equity Compensation
Plan, the fee is computed based upon the average of the high and low
prices for a share of Common Stock of the Registrant on November 20,
1998 as reported on the Nasdaq SmallCap Market.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, as filed by Tangram Enterprise Solutions, Inc.
(the "Registrant") with the Securities and Exchange Commission (the
"Commission"), are incorporated by reference in this Registration Statement:
1. The Registrant's Annual Report on Form 10-K for the year ended December
31, 1997.
2. The Registrant's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998, June 30, 1998, and September 30, 1998.
3. The description of the Registrant's Common Shares contained in the
Registrant's Registration Statement on Form 8-A filed by the Registrant on March
5, 1987 to register such securities under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
All documents filed by the Registrant pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act after the date of this Registration Statement
but prior to the filing of a post-effective amendment that indicates that all
securities offered hereby have been sold or that deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of each
such document.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein (or in any other subsequently filed document
that is also incorporated by reference herein) modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part hereof.
Item 4. Description of Securities.
Not Applicable
Item 5. Interests of Named Experts and Counsel.
The validity of the issuance of the shares of Common Stock offered hereby
has been passed upon for the Company by John B. Wright, II, Esquire, 800 The
Safeguard Building, 435 Devon Park Drive, Wayne, PA 19087-1945. Mr. Wright is
Senior Corporate Counsel of Safeguard Scientifics, Inc. Safeguard Scientifics
(Delaware), Inc., a wholly owned subsidiary of Safeguard Scientifics, Inc.,
beneficially owns 10,448,738 shares of Common Stock of the Registrant,
representing approximately 67% of the Company's outstanding shares of Common
Stock.
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Item 6. Indemnification of Directors and Officers.
Sections 1741 and 1742 of the Pennsylvania Business Corporation Law of
1988, as amended (the "PBCL") provide that a business corporation may indemnify
directors and officers against liabilities they may incur as such provided that
the particular person acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation,
and, with respect to any criminal proceeding, had no reasonable cause to believe
his or her conduct was unlawful. In general, the power to indemnify under these
sections does not exist in the case of actions against a director or officer by
or in the right of the corporation if the person otherwise entitled to
indemnification shall have been adjudged to be liable to the corporation unless
it is judicially determined that, despite the adjudication of liability but in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnification for specified expenses. The corporation is required
to indemnify directors and officers against expenses they may incur in defending
actions against them in such capacities if they are successful on the merits or
otherwise in the defense of such actions.
Section 1713 of the PBCL permits the shareholders to adopt a bylaw
provision relieving a director (but not an officer) of personal liability for
monetary damages except where (i) the director has breached the applicable
standard of care, and (ii) such conduct constitutes self-dealing, willful
misconduct or recklessness. The statute provides that a director may not be
relieved of liability for the payment of taxes pursuant to any federal, state or
local law or responsibility under a criminal statute.
Section 1746 of the PBCL grants a corporation broad authority to indemnify
its directors, officers and other agents for liabilities and expenses incurred
in such capacity, except in circumstances where the act or failure to act giving
rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness.
The Registrant's bylaws, in Article X, Section 1, provide that a director
of the Registrant or any other corporation for which he serves as such at the
request of the Registrant shall not be personally liable for monetary damages
for any action taken, or any failure to take any action, unless the director has
breached or failed to perform the duties of his office as defined in the PBCL,
and the breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness.
Article X, Section 2 of the Registrant's bylaws provides that the
Registrant shall indemnify each person who is or was a director, officer or
employee of the Registrant, or of any other corporation for which he served as
such at the request of the Registrant, against any and all liability and
reasonable expense that may be incurred by him in connection with or resulting
from any claim, action, suit, or proceeding (whether brought by or in the right
of the Registrant or such other corporation or otherwise), civil or criminal or
in connection with an appeal relating thereto, in which he may become involved,
as a party or otherwise, by reason of his being or having been a director,
officer or employee of the Registrant or of such other corporation, or by reason
of any past or future action taken or not taken in his capacity as such
director, officer or employee, whether or not he continues to be such at the
time such liability or expense is incurred, unless such person has breached or
failed to perform
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the duties of his office which, for officers and directors, shall be defined in
the BCL and such breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness. As used in Article X, the terms "liability" and
"expense" shall include, but shall not be limited to, counsel fees and
disbursement amounts of judgments, fines or penalties. The termination of any
claim, action, suit or proceeding, civil or criminal, by judgment, settlement
(whether with or without court approval) or conviction, or upon a plea of guilty
or of nolo contendere, or its equivalent, shall not create a presumption that a
director, officer or employee did not meet the standards of conduct set forth in
the first sentence of Section 2 of Article X of the bylaws except where there
shall have been a judgment rendered by a court specifically finding that the
action or conduct of such director, officer or employee constituted
self-dealing, recklessness or willful misconduct. Any such director, officer or
employee referred to in Section 2 of Article X of the bylaws who has been wholly
successful, on the merits or otherwise, with respect to any claim, action, suit
or proceeding of the character described therein shall be entitled to
indemnification as of right. Expenses incurred with respect to any civil or
criminal action, suit or proceeding may be advanced by the Registrant prior to
the final disposition thereof upon receipt of an undertaking by or on behalf of
the recipient to repay such amount if it shall ultimately be determined that he
is not entitled to indemnification under Article X. The rights of
indemnification provided in Article X shall be in addition to any rights to
which any person concerned may otherwise be entitled by contract or as a matter
of law, and shall inure to the benefit of the heirs, executors and
administrators of any such person.
The Registrant has a directors' and officers' liability insurance policy
that affords directors and officers with insurance coverage for losses arising
from claims based on breaches of duty, negligence, error and other wrongful
acts.
Item 7. Exemption from Registration Claimed.
Not Applicable
Item 8. Exhibits.
The following exhibits are filed as part of this Registration Statement.
4.1 1997 Equity Compensation Plan (incorporated by reference to Exhibit 4.1 of
the Company's Quarterly Report on Form 10-Q for the period ended September
30, 1997)
4.2 Stock Option Plan for Directors
4.3 Stock Option Agreement between the Registrant's predecessor-in-interest
(Rabbit Software Corporation) and Charles A. Root dated December 22, 1992
5.1 Opinion of John B. Wright, II, Esquire
23.1 Consent of Ernst & Young LLP
23.2 Consent of Counsel -- included in opinion filed as Exhibit 5 hereto
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24.1 Power of Attorney (included with signature page of this Registation
Statement)
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the
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Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
EXPERTS
The balance sheets of Tangram Enterprise Solutions, Inc. as of December 31, 1997
and 1996, and the related statements of operations, shareholders' equity and
cash flows for each of the years in the three-year period ended December 31,
1997, incorporated by reference have been incorporated by reference herein in
reliance upon the reports of Ernst & Young LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Cary, North Carolina on November 23, 1998.
TANGRAM ENTERPRISE SOLUTIONS, INC.
By: /s/ W. Christopher Jesse
------------------------
W. Christopher Jesse, President and
Chief Executive Officer
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Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated. EACH PERSON IN SO SIGNING, ALSO MAKES, CONSTITUTES AND APPOINTS
W. CHRISTOPHER JESSE AND JOHN N. NELLI, AND EACH OF THEM, HIS TRUE AND LAWFUL
ATTORNEYS-IN-FACT, IN HIS NAME, PLACE, AND STEAD TO EXECUTE AND CAUSE TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ANY AND ALL AMENDMENTS TO THIS
REGISTRATION STATEMENT.
Dated: Nov. 23, 1998 /s/ W. Christopher Jesse
--------------------------------------------
W. Christopher Jesse, President and
Chief Executive Officer and Director
(Principal Executive Officer)
Dated: Nov. 23, 1998 /s/ John N. Nelli
--------------------------------------------
John N. Nelli, Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Dated: Nov. 23, 1998 /s/ Charles A. Root
--------------------------------------------
Charles A. Root, Chairman of the Board
Dated: Nov. ____, 1998
--------------------------------------------
Michael H. Forster, Director
Dated: Nov. 23, 1998 /s/ Steven F. Kuekes
--------------------------------------------
Steven F. Kuekes, Director
Dated: Nov. 23, 1998 /s/ John F. Owens
--------------------------------------------
John F. Owens, Director
Dated: Nov. 23, 1998 /s/ Carl G. Sempier
--------------------------------------------
Carl G. Sempier, Director
Dated: Nov. 23, 1998 /s/ Harry Wallaesa
--------------------------------------------
Harry Wallaesa, Director
Dated: Nov. 23, 1998 /s/ Carl Wilson
--------------------------------------------
Carl Wilson, Director
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
4.1 1997 Equity Compensation Plan (incorporated by reference to Exhibit
4.1 of the Company's Annual Report on Form 10-Q for the period ended
September 30, 1997)
4.2 Stock Option Plan for Directors
4.3 Stock Option Agreement between the Registrant's
predecessor-in-interest (Rabbit Software Corporation) and Charles A.
Root dated December 22, 1992
5.1 Opinion of John B. Wright, II, Esquire
23.1 Consent of Ernst & Young LLP
23.2 Consent of Counsel -- included in opinion filed as Exhibit 5 hereto
24.1 Power of Attorney (included with signature page of this Registation
Statement)
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EXHIBIT 4.2
TANGRAM ENTERPRISE SOLUTIONS, INC.
STOCK OPTION PLAN FOR DIRECTORS
[Adopted by the Board on December 22, 1992 and approved by the shareholders on
May 12, 1993]
Section 1. Purpose.
The purpose of the Plan is to promote the interests of the
Corporation and its shareholders by attracting and retaining highly qualified
independent directors with an investment interest in the future success of the
Corporation.
Section 2. Definitions.
Unless the context clearly indicates otherwise, the following terms,
when used in the Plan, shall have the meanings set forth in this Section.
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Corporation" shall mean Tangram Enterprise Solutions, Inc., a
Pennsylvania corporation.
(d) "Corporation's Affiliates" shall mean the Corporation's
consolidated subsidiaries, Safeguard Scientifics, Inc. ("Safeguard"), and any
consolidated subsidiary or affiliated partnership company of Safeguard. For
purposes of this definition, an affiliated partnership company of Safeguard
shall be defined as an entity controlled by Safeguard, directly or indirectly,
through one or more intermediaries or through management of any venture capital
fund.
(e) "Director" shall mean any member of the Board.
(f) "Fair Market Value" shall mean the inside asked price or, in the
event the Corporation's shares of common stock are traded on the NASDAQ National
Market System or a national securities exchange, the closing price on the date
of grant.
(g) "Grantee" shall mean a person granted an Option under the Plan.
(h) "Eligible Directors" shall mean Directors who are not also
employees of the Corporation or the Corporation's Affiliates.
(i) "Options" shall mean options granted under the Plan.
(j) "Plan" shall mean this Stock Option Plan for Directors as set
forth herein and as amended from time to time.
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(k) "Stock" shall mean shares of the common stock, $.01 par value,
of the Corporation.
Section 3. Shares of Stock Subject to the Plan.
Subject to the provisions of Section 6, the Stock which may be
issued pursuant to Options granted under the Plan shall not exceed 100,000
shares in the aggregate. Stock issuable upon the exercise of any Option may be
authorized but unissued shares or reacquired shares of Stock. Shares of Stock
subject to an Option which are not issued pursuant to the exercise of such
Option shall be available for subsequent issuance under the Plan.
Section 4. Grant of Options.
(a) Eligibility; Grant. Only Eligible Directors of the Corporation
shall receive Options under the Plan. Subject to the approval of the Plan by the
shareholders of the Corporation and to the availability of Stock issuable under
the Plan pursuant to Section 3 hereof, on December 22, 1992, each Eligible
Director who was elected to office on or after October 1, 1992, shall receive,
and upon election, any Eligible Director who has not theretofore been a Director
of the Corporation shall receive, an Option under the Plan to purchase 10,000
shares of Stock (the "Initial Grant"). Thereafter additional Options under the
Plan to purchase 2,000 shares of Stock (the "Service Grants") shall be granted
to each Eligible Director on (i) the second anniversary of his or her election
as a Director and (ii) on the anniversary of his or her election as a Director
after the end of every two years' service thereafter, provided, however, that
the maximum number of shares of Stock subject to Options which may be granted to
an Eligible Director under the Plan shall not exceed 20,000 shares of Stock. The
Initial Grant and the Service Grants shall be subject to the availability of
Stock issuable under the Plan pursuant to Section 3 hereof, shall be subject to
adjustment as provided in Section 6 hereof, and shall not be subject to the
discretion of any person or persons.
(b) Exercise Price. The exercise price of each share of Stock
subject to an Option shall equal the Fair Market Value of a share of Stock on
the date such Option is granted. In the event the anniversary of an Eligible
Director's election shall fall on a Saturday, Sunday or holiday, the exercise
price of each share of Stock subject to such Option shall equal the Fair Market
Value of a share of Stock on the last trading day immediately preceding such
date.
(c) Term; Exercise. Each Option shall have a term of ten years from
the date of Option grant. Each Initial Grant shall become exercisable in four
equal installments of a whole number of shares of Stock on the first, second,
third and fourth anniversaries of the date of grant of such Option. Service
Grants shall become exercisable in two equal installments of a whole number of
shares of Stock on the first and second anniversaries of the date of grant of
such Option.
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Section 5. Exercise of Options.
Upon the exercise of any Option, the Grantee shall pay the exercise
price of the shares of Stock being purchased (a) in cash or its equivalent; (b)
in Stock previously acquired by the Grantee, provided that if such Stock was
acquired through exercise of an ISO, such Stock has been held by the Grantee for
a period of not less than the holding period described in section 422(a)(1) of
the Internal Revenue Code of 1986, as amended (the "Code"), on the date of
exercise, or if such Stock was acquired through exercise of an NQSO or of an
option under a similar plan, such Stock has been held by the Grantee for a
period of more than one year on the date of exercise, and further provided that
the Grantee shall not have tendered Stock in payment of the exercise price of
any other Option under the Plan or any other stock option plan of the
Corporation within six calendar months of the date of exercise; (c) in any
combination of (a) and (b) above; or (d) by delivering a properly executed
notice of exercise of the Option to the Corporation and a broker, with
irrevocable instructions to the broker to deliver to the Corporation on the
settlement date the amount of sale proceeds necessary to pay the exercise price
of the Option. In the event the Option price is paid, in whole or in part, with
Stock, the portion of the Option price so paid shall be equal to the "fair
market value" on the date of tender of the Stock so tendered in payment of such
Option price.
The number of shares of Stock which are issued pursuant to the exercise of
an Option shall be charged against the maximum limitation on shares of Stock set
forth in Section 3 hereof.
Section 6. Certain Corporate Changes.
(a) Stock Splits, Etc.. In the event of any change in the number or
class of shares of Stock outstanding by reason of a stock dividend, stock split,
subdivision or combination of shares, the number and class of shares of Stock
subject to the Plan and to Options granted or to be granted under the Plan, and
the exercise price of each outstanding Option, shall be proportionately adjusted
(rounded to the nearest whole number of shares).
(b) Corporate Reorganizations. In the event that the Corporation is
to be dissolved or liquidated, or the Corporation is a party to a merger or
consolidation with another corporation in which the Corporation will not be the
surviving entity or in which the outstanding shares of Stock will be converted
into cash, securities or other property, or in the event that the Corporation is
a party to a reorganization, then upon exercise of the Options, the holder
thereof shall be entitled only to receive for the exercise price thereof the
amount of cash, securities or other property into or for which one share of
Stock was converted or exchanged multiplied by the number of shares of Stock
subject to such Option.
Section 7. Termination of Directorship.
Upon the Grantee ceasing to be an Eligible Director of the
Corporation for any reason other than as a result of (i) the employment of such
person by the Corporation or the Corporation's Affiliates (ii) the Grantee's
death, or (iii) the Grantee's retirement after age 65, such Grantee's Options
shall be terminated six months after
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such Grantee's so ceasing to be an Eligible Director, provided, however, that in
no event shall the period extend beyond the expiration of the Option term. In no
event shall any Option be exercisable for more than the maximum number of shares
of Stock that the Grantee was entitled to purchase at the date of the Grantee's
so ceasing to be an Eligible Director.
Upon the Grantee ceasing to be an Eligible Director as a result of
the employment of such person by the Corporation or the Corporation's affiliates
or as a result of the retirement of the Grantee after age 65, such Grantee shall
retain the right to exercise the installments of his or her Options in
accordance with the terms of this Plan, whether or not such installments were
exercisable as of the date the Eligible Director became an employee or retired,
provided, however, that the Options and the exercise of installments with
respect thereto shall be subject to the same restrictions set forth in the first
and third paragraphs of this Section 7 as if the Grantee had been an Eligible
Director upon the occurrence of any of the events described therein.
Upon the Grantee ceasing to be an Eligible Director as a result of
death, the period during which such Grantee's estate or the person or persons
who acquired the right to exercise such Option by bequest or inheritance, may
exercise any outstanding installments of such Grantee's Options which were
exercisable as of the date of such death shall not exceed one year from the date
of death, provided, however, that in no event shall the period extend beyond the
expiration of the Option term. In no event shall any Option be exercisable for
more than the maximum number of shares of Stock that the Grantee was entitled to
purchase at the date of death.
Section 8. General Provisions.
(a) Each Option grant shall be evidenced by a written instrument
containing terms and conditions consistent with the Plan.
(b) No Grantee, and no beneficiary or other persons claiming under
or through the Grantee, shall have any right, title or interest by reason of any
Option to any particular assets of the Corporation, or any shares of Stock
allocated or reserved for the purposes of the Plan or subject to any Option
except as set forth herein. The Corporation shall not be required to establish
any fund or make any other segregation of assets to assure the payment of any
Option.
(c) No right under the Plan shall be subject to anticipation, sale,
assignment, pledge, encumbrance, or charge except by will or the laws of descent
and distribution, and an Option shall be exercisable during the Grantee's
lifetime only by the Grantee. Subject to the provisions of Section 7 hereof, in
the event of a Grantee's death, his Options may be exercised by the Grantee's
legal representatives.
(d) Notwithstanding any other provision of the Plan or agreements
made pursuant hereto, the Corporation shall not be required to issue or deliver
any certificate for shares of Stock under this Plan prior to fulfillment of all
of the following conditions:
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(1) Any registration or other qualification of such shares
under any state or federal law or regulation, or other qualification
which the Board shall, upon the advice of counsel, deem necessary or
advisable;
(2) The obtaining of any other required consent, approval or
permit from any state or federal governmental agency; and
(3) The execution by the Grantee (or the Grantee's legal
representative) of such written representation that counsel for the
Corporation shall advise is necessary or advisable to the effect
that the shares of Stock then being purchased are being purchased
for investment with no present intention of reselling or otherwise
disposing of such shares in any manner which may result in a
violation of the Securities Act of 1933, as amended, and the
placement upon certificates for such shares of an appropriate legend
in connection therewith.
(e) In no event shall the Corporation be required to issue a
fractional share hereunder.
Section 9. Effective Date; Termination and Amendment.
The Plan became effective on December 22, 1992, the date of its
adoption by the Board, subject to the approval of the Corporation's shareholders
at its 1993 Annual Meeting.
The Board may terminate the Plan or make such modifications or
amendments to the Plan as it shall deem advisable, provided, however, that the
Board may not, without the affirmative vote of the holders of a majority of the
outstanding shares present, or represented and entitled to vote on such issues,
at a meeting held in accordance with Pennsylvania law or, alternatively, without
the written consent of the holders of a majority of the outstanding shares
entitled to vote on such issues: (a) change the number of shares for which
Options may be granted under the Plan in the aggregate or to any Grantee (except
as provided in Section 6 hereof) or (b) make any other material amendment to the
Plan, provided, however, that no shareholder approval shall be required for an
amendment or modification pursuant to Section 9(b) if Rule 16b-3, or any
successor provision promulgated pursuant to Section 16 of the Securities
Exchange Act of 1934 does not require shareholder approval.
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EXHIBIT 4.3
RABBIT SOFTWARE CORPORATION
STOCK OPTION AGREEMENT
NON-QUALIFIED STOCK OPTION AGREEMENT, dated as of the 22nd day of
December, 1992 ("Grant Date"), between Rabbit Software Corporation, a
Pennsylvania corporation (hereinafter called the "Corporation"), and Charles A.
Root (the "Optionee").
WHEREAS, the Corporation desires to afford the Optionee an opportunity to
purchase shares of Common Stock of the Corporation ("Common Stock") as
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto,
intending to be legally bound hereunder, agree as follows:
1. Grant of Option. The Corporation hereby grants to the Optionee the
right and option (hereinafter called the "Option") to purchase all or any part
of an aggregate of 150,000 shares of Common Stock. It is intended that the
Option granted hereunder be a non-qualified stock option ("NQSO") and is not
intended to constitute an incentive stock option ("ISO") under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price of the shares of Common Stock
covered by the Option shall be $1.00 per share. It is the determination of the
Stock Option Committee (the "Committee") that on the Grant Date the Option price
was not less than the fair market value of said Common Stock.
3. Term. Unless earlier terminated pursuant to any provision of this
Option Agreement, this Option shall expire ten (10) years from the Grant Date.
This Option shall not be exercisable on or after the Expiration Date.
4. Exercise of Option. Subject to Paragraph 3, and except as otherwise set
forth below in this Agreement, this Option may be exercised in whole or in part
as follows:
Percent of Total Option
Date Shares Exercisable
---- ------------------
On or before December 15, 1993 20%
December 16, 1993 to December 15, 1994 40%
December 16, 1994 to December 15, 1995 60%
December 16, 1995 to December 15, 1996 80%
On or after December 16, 1996 100%
Options that become exercisable in accordance with the foregoing shall
remain exercisable, subject to the provisions contained in this Agreement, until
the expiration
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of the term of this Option as set forth in Paragraph 3 or until other
termination of the Option as set forth in this Agreement.
5. Method of Exercising Options. Subject to the terms and conditions of
this Agreement, the Option may be exercised upon written notice to the
Corporation, at its principal office, which is presently located at Great Valley
Corporate Center, Seven Great Valley Parkway East, Malvern, Pennsylvania 19355.
Such notice shall state the election to exercise the Option and the number of
shares with respect to which it is being exercised; shall be signed by the
person or persons so exercising the Option; shall, unless the Corporation
otherwise notifies the Optionee, be accompanied by the investment certificate
referred to in Paragraph 6 hereof; and shall be accompanied by payment of the
full Option price of such shares.
The Option price shall be paid to the Corporation (a) in cash or its
equivalent, or (b) through the delivery of shares of Common Stock which shall be
valued at their fair market value on their date of tender, provided that if the
shares so tendered were acquired through exercise of an ISO, the Optionee, on
the date of tender, shall have held such shares for a period of not less than
the holding period described in section 422(a)(1) of the Code, or if such shares
of Common Stock were acquired through exercise of an NQSO or of an option under
a similar plan, the Optionee, on the date of tender, shall have held such shares
for a period of more than one (1) year, and further provided that the Optionee
shall not have tendered shares of Common Stock in payment of the exercise price
of any Option within six (6) months of the date of exercise, or (c) by a
combination (a) and (b) above, or (d) if the shares acquired upon exercise of
the Option are covered by an effective registration statement under the
Securities Act of 1933 (the "1933 Act"), by delivering a properly executed
notice of exercise of the Option to the Corporation and a broker, with
irrevocable instructions to the broker promptly to deliver to the Corporation
the amount of sale proceeds necessary to pay the exercise price of the Option.
Upon receipt of such notice and payment, the Corporation shall deliver a
certificate or certificates representing the shares with respect to which the
Option is so exercised. The certificate or certificates for the shares as to
which the Option shall have been so exercised shall be registered in the name of
the person so exercising the Option and shall be delivered as provided above to
or upon the written order of the person exercising the Option. In the event the
Option shall be exercised by any person or persons after the death of the
Optionee, such notice shall be accompanied by appropriate proof of the right of
such person or persons to exercise the Option. All shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable.
6. Shares to be Purchased for Investment. Unless the Corporation has
theretofore notified the Optionee that a registration statement covering the
shares to be acquired upon the exercise of the Option has become effective under
the 1933 Act and the Corporation has not thereafter notified the Optionee that
such registration is no longer effective, it shall be a condition to any
exercise of this Option that the Optionee represent to the Corporation in
writing at the time the Optionee exercises the Option granted hereby that the
Optionee (a) is acquiring the Option Shares for the purpose of investment and
not with a view to distribution and will not dispose of such shares in any
manner that would involve a violation of applicable securities laws, (b) has
been
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advised and understands that the Option Shares have not been registered under
the Securities Act of 1933, are "restricted securities" within the meaning of
Rule 144 under the Act, are subject to restrictions on transfer and that the
Corporation is under no obligation to register the Option Shares under the Act
or to take any action which would make available to the Optionee any exemption
from such registration, and (c) understands that the certificates for such
Option Shares shall bear an appropriate legend restricting transfer in
accordance with applicable securities laws. This representation need not be made
if the shares of the Common Stock acquired through the exercise of the Option
have been registered with the Securities and Exchange Commission prior to the
date of exercise.
7. Non-Transferability of Option. This Option is not assignable or
transferable by Optionee other than by the laws of descent and distribution, and
during the lifetime of the Optionee, the Option shall be exercisable only by
Optionee or by his guardian or legal representative.
8. Termination of Services. If at any time the Committee determines that
Optionee has ceased to perform services for the Corporation of a nature and to
an extent required for continued vesting and exercisability of this Option (such
determination to be made in the sole discretion of the Committee), this Option
shall expire thirty days after notice of such determination by the Committee is
given to Optionee. This Option may be exercised, to the extent of the number of
shares with respect to which the Optionee could have exercised it on the date of
such termination of services as set forth in Paragraph 4, or to any greater
extent permitted by the Committee in its discretion, by the Optionee at any time
prior to the earliest of (a) the Expiration Date specified in Paragraph 3, (b)
the termination of the Option pursuant to Paragraph 11 of this Agreement, or (c)
thirty (30) days after the notice of termination by the Committee is given to
Optionee.
9. Disability. If Optionee becomes disabled (as defined in Section
22(e)(3) of the Code) prior to the Expiration Date of this Option as set forth
in Paragraph 3 and the Committee, in its sole discretion, determines that as a
consequence of such disability, Optionee has ceased to perform services for the
Corporation of a nature and to an extent required for continued vesting and
exercisability this Option shall expire three (3) months after notice of such
determination by the Committee is given to Optionee. This Option may be
exercised, to the extent of the number of shares with respect to which the
Optionee could have exercised it on the date of such termination of services as
set forth in Paragraph 4, or to any greater extent permitted by the Committee in
its discretion, by the Optionee at any time prior to the earliest of (a) the
Expiration Date specified in Paragraph 3, (b) the termination of the Option
pursuant to Paragraph 11 of this Agreement, or (c) three (3) months after the
notice of termination by the Committee is given to Optionee.
10. Death. If Optionee dies during his term of service to the Corporation
and prior to the Expiration Date of this Option as set forth in Paragraph 3,
this Option may be exercised, to the extent of the number of shares with respect
to which the Optionee could have exercised it on the date of his death as set
forth in Paragraph 4, or to any greater extent permitted by the Committee in its
discretion. by Optionee's estate, personal representative or beneficiary who
acquired the right to exercise this Option by bequest or inheritance or by
reason of Optionee's death, at any time prior to the earliest
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<PAGE>
of (a) the Expiration Date specified in Paragraph 3, (b) the termination of the
Option pursuant to Paragraph 11 of this Agreement, or (c) one (1) year after the
date of Optionee's death.
11. Stock Adjustments. In the event of a reorganization, recapitalization,
change of shares, stock split, or spinoff, stock dividend, reclassification,
subdivision or combination of shares, merger, consolidation, rights offering, or
any other change in the corporate structure or shares of the Corporation, the
Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in the number and kind of shares and the purchase prices of
outstanding Options, and such adjustments shall be effective and binding on the
Optionee and the Corporation.
In the event of a corporate transaction (as that term is described in
section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), the outstanding Option shall be
assumed by the surviving or successor corporation; provided, however, that in
the event of a proposed corporate transaction, the Committee may terminate all
or a portion of the outstanding Option if it determines that such termination is
in the best interests of the Corporation. If the Committee decides to terminate
the outstanding Option, the Committee shall give Optionee not less than seven
days' notice prior to any such termination by reason of such a corporate
transaction, and any such outstanding Option which is to be so terminated may be
exercised (if and only to the extent that it is then exercisable) up to, and
including the date immediately preceding such termination.
12. Withholding of Taxes. The obligation of the Corporation to deliver
shares of Common Stock upon the exercise of the Option shall be subject to
Federal, state and local tax withholding requirements.
13. Governing Law. This Agreement shall be construed in a manner
consistent with the Code provisions, and its interpretation shall otherwise be
governed by Pennsylvania law.
14. Prior Option Grants. As a condition of the Corporation's issuance of
the Option hereunder to Optionee, Optionee acknowledges and agrees to the
immediate cancellation of all existing options or other rights to purchase
capital stock of the Corporation granted prior to the date of this Agreement,
whether or not vested or exercisable.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Optionee has
hereunto set his hand and seal, all on the day and year first above written.
RABBIT SOFTWARE CORPORATION
By:
Title:
Charles A. Root, Optionee
19
EXHIBIT 5.1
November 23, 1998
Tangram Enterprise Solutions, Inc.
11000 Regency Parkway, Suite 401
Cary, North Carolina 27511-8504
Gentlemen:
I have acted as counsel to Tangram Enterprise Solutions, Inc. (the
"Company"), and I am delivering this opinion in connection with the preparation
of the Company's Registration Statement on Form S-8 (the "Registration
Statement") to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act") relating to an aggregate of
2,198,000 shares of Common Stock of the Company, $.01 par value per share (the
"Shares"), issuable upon the exercise of options granted to Charles A. Root by
the Registrant's predecessor-in interest (Rabbit Software Corporation) under the
Stock Option Agreement dated December 22, 1992, upon the exercise of options
granted under the Company's Stock Option Plan for Directors, and upon the
exercise of outstanding options or other awards that may be granted in the
future under the Company's 1997 Equity Compensation Plan (collectively the
"Plans').
In this connection, I have reviewed the Company's Articles of
Incorporation, its Bylaws, resolutions of its Board of Directors and
shareholders, and such other documents and corporate records as I have deemed
appropriate in the circumstances. My opinion is limited solely to matters
governed by the laws of the Commonwealth of Pennsylvania and the federal laws of
the United States of America.
Based upon the foregoing and consideration of such questions of law as I
have deemed relevant, I am of the opinion that the Shares, when issued in
accordance with the terms of the respective Plans, will be validly issued, fully
paid and nonassessable.
I consent to the use of this opinion as an exhibit to the Registration
Statement. In giving such opinion, I do not thereby admit that I am acting
within the category of persons whose consent is required under Section 7 of the
Act or the rules or regulations of the Securities and Exchange Commission.
<PAGE>
This opinion is rendered to you in connection with the above-referenced
Registration Statement and may be relied on by you only in connection therewith.
No other person may rely on this opinion. This opinion may not be quoted by you
or any other person without my prior written consent.
My rendering of this opinion to you does not obligate me to render any
further opinion to you or to update this opinion at any time in the future.
Very truly yours,
/s/ John B. Wright, II
John B. Wright, II
Senior Corporate Counsel
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8) pertaining to the 1997 Equity Compensation
Plan, Stock Option Plan for Directors and the Charles A. Root Stock Option
Agreement of Tangram Enterprise Solutions, Inc. and to incorporation by
reference therein of our report dated January 23, 1998, with respect to the
financial statements and schedule of Tangram Enterprise Solutions, Inc. included
in its Annual Report (Form 10-K) for the year ended December 31, 1997, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Raleigh, North Carolina
November 20, 1998
